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81 comments on Stuart's 2006 predictions

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Will on January 2, 2006 - 8:27pm Permalink | Subthread | Comments top
Wow! Stuart. Compared to Kunstler you're forecast is rosy. I think we are going to have nervous markets all through hurricane season. I think NG is about to get ugly. And I suspect we will see strong market stimulation by late spring to offset the housing slowdown.

Politically, after the slime dissapates from lobby-gate, we are going to see new battle lines. We are overdue for a green movement. The need to further exploit coal combined with  the reality of tar sands and oil shales will disturb everyone.

Russia just did us a big favor flexing muscle in Ukraine. Otherwise, I think we'd see significant pressure on the dollar. Still might.

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louGrinzo on January 2, 2006 - 8:59pm Permalink | Subthread | Parent | Comments top
I read Kunstler's 2006 predictions just before finding Stuart's.  I like Kunstler's much better, as they're so much easier to ridicule.  (I just love his prediction that the DOW will hit 4,000 or below in 2006.  Yowza.)

In general I think Stuart is right on the money.  I expect to the IT sector picking up the slack a little quicker than he does, and I'm not convinced any US carmaker will go into bankruptcy.  Although if it happens, I'm betting it will be GM, who is showing yet more signs of being so utterly frickin' clueless as to be beyond parody.  (See the GCC article http://www.greencarcongress.com/2006/01/gm_will_showcas.html#more for news about GM's incredibly lame efforts in hybrid technology.)

I notice that Stuart seems to be expecting that energy prices will be more notable for their volatility than absolute level, another detail I agree with.  The energy markets will be strung tighter than piano wires throughout 2006, and every little blip will send prices on another wild ride.  (In terms of giving people an incentive to be more energy efficient, this is almost as effective as high prices; volatile prices will induce a lot more uncertainty into energy costs, something people, institutions, and companies most definitely don't like.)

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BabyPeanut on January 2, 2006 - 9:27pm Permalink | Subthread | Parent | Comments top
I was disappointed by the lack of mention of future pirates.  Those were cool.
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Leanan on January 2, 2006 - 9:41pm Permalink | Subthread | Parent | Comments top
Kunstler at his most delusional:

This will represent a moment of painful clarity for market professionals, as they realize that an industrial economy and the finance that serves it must be based on the expectation of generating real future wealth, not on zero-sum rackets, games of monetery musical chairs, or casino legerdemain.

Hah.  If the dot-com bust didn't teach them that, nothing will.  

I predict we will limp along for years, if not decades.  Tinkering with interest rates, tax laws, federal programs, etc., wondering why nothing seems to work.

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Stoneleigh on January 3, 2006 - 10:12am Permalink | Subthread | Parent | Comments top
I see the dotcom bust as only the first leg down and the partial recovery since late 2002 as a dead cat bounce. The next leg down should include the point of recognition of the new trend (the uh-oh effect) and should take us well below DJIA 7500. Kunstler's DJIA 4000 is probably a reasonable target for the next leg down, but I'd say it was more likely to reach that point in 2007. I'm also expecting a US dollar implosion over the same timeframe. Downward spirals of positive feedback can be very rapid as they are driven by fear, which is a very sharp emotion.
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Stoneleigh on January 3, 2006 - 11:04am Permalink | Subthread | Parent | Comments top
Politicians who preside over market crashes and subsequent economic collapse are highly unlikely to escape serious political consequences. I would therefore expect Bush to be ousted, one way or another, before completing his term in office.
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Leanan on January 3, 2006 - 2:17pm Permalink | Subthread | Parent | Comments top
Whoa!  Now that's a daring prediction.  

Though if things get really bad, I could see the GOP looking for any excuse to use Bush as a scapegoat and throw him overboard.  And there sure are plenty of reasons they could use.  Looks like Abramoff is going to sing...

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Stoneleigh on January 4, 2006 - 11:30am Permalink | Subthread | Parent | Comments top
I doubt very much that the Republican party will survive in its current form. The political fallout from the financial and economic debacle to come on their watch should be enough to tear it apart. I expect their successors on the political right to be even worse - fundamentalist, xenophobic, fascist etc.

The economic decline should last long enough to take out the Democrats as a party as well, remaking the political landscape entirely over the next decade or so. After all, with so many grossly unrealistic expectations to be shattered (to put it mildly) no matter who is in power, it would be naive to assume there would be no political upheaval as a result.

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Whitehall on January 4, 2006 - 12:58pm Permalink | Subthread | Parent | Comments top
Stoneleigh,

Take a look at Dick Morris' analysis - you seem to be in the same self-delusional bubble that many Democrats have created for themselves the last few years:

http://www.nypost.com/postopinion/opedcolumnists/60838.htm

Remember that Dick Morris was, roughly, Bill Clinton's Karl Rove for many years.  He's got a hard-boiled understanding of real world politics.  He's not very likable but he usually has something cogent to say.

Frankly, it's the Democratic Party that is risking irrelevancy although I'd think that premature to assert dissolution or replacement of either party.

I agree with your general prediction that the political center will shift away from liberalism, political correctness, and multiculturalism as the challenges to the American way of life grow stronger and more visible.  The Democratic Party seems to want no part of that shift and so will be the relative loser.  We are in for a period of political turmoil but politicians are either adaptable or become FORMER politicians quickly in a democracy.

However, your use of the word "fascism" is inappropriate.  Suggest you read Boswell's recent biography of Mussolini to see why.

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Stoneleigh on January 4, 2006 - 9:59pm Permalink | Subthread | Parent | Comments top
I am neither a Republican, nor a Democrat, and have little respect for either party. Fortunately, as I am not an American, I will never have to vote for either of them.
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Leanan on January 5, 2006 - 4:47pm Permalink | Subthread | Parent | Comments top
Stoneleigh is predicting the obliteration of both parties.  I think he's right.  Neither the Democrats or the GOP have the answers to the problems of peak oil.  And whoever is in power at the time TSHTF is going to get the brunt of the outrage.  
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Whitehall on January 5, 2006 - 10:44pm Permalink | Subthread | Parent | Comments top
If the Kos energy proposal we've discussed on this board is representative of the Democratic Party's approach, and I think it is, then we have two broad philosophic alternatives:

Democrats - tax and spend and regulate

Republicans - let the market work

Of course, in power neither would be able to implement a purist approach but I'd think they will follow these general approaches.

In this case, I'd argue that the Republican approach would be more effective in allowing the economy to adapt with the least pain.  We have the experience of the Carter years to show that the Democratic approach certainly has its problems.

I will agree in advance that even the Republican approach will still require a reduction in standards of living and a lower economic growth rate. However, the central planning approach of the Democrats would surely lead to maladaptations and snafus at the system level.  I think American voters understand that.

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Leanan on January 6, 2006 - 7:40am Permalink | Subthread | Parent | Comments top
IMO, you're arguing about who will do a better job of rearranging the deck chairs on the Titanic.  

As for what the voters will think...Stoneleigh's right: they will support whoever is NOT in power.  Whenever times are bad, they "throw the rascals out."  

Based on what has happened in other collapsing societies, I expect taxing, spending, and regulating to increase no matter who is in power.  The government has grown more under Bush and a GOP congress than it has since FDR; the GOP has not had real Libertarian leanings since Newt Gingrich was ousted.  

People and corporations say they want less government, but it's not true.  They want government programs, especially when times are bad.  They want their jobs and markets protected.  They want infrastructure built, to generate jobs and help business.  

The Great Depression resulted in the New Deal, and I'd bet the farm something similar will happen again.  

Of course, it won't work this time, but I seriously doubt any party that tries to "let the market work" will gain any traction when "the market" is letting children starve and little old ladies freeze to death.  

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Stoneleigh on January 6, 2006 - 12:32am Permalink | Subthread | Parent | Comments top
The important point, as you say, is that the party in power takes the blame. The problem is larger than any party and has been building for decades, during which both parties had spells in office. The electorate, however, seems to blame the party in power whether or not it is reasonable to do so (and whether or not the opposition has a viable alternative plan).

For instance, I don't think Herbert Hoover deserved the reputation he ended up with for presiding over the Great Depression. He couldn't prevent it, but no one else would have been able to do so either. It was the inevitable aftermath of the roaring twenties. In the current case, the party in power has acted as the aggressor in a 'pre-emptive war', disregarded the Geneva Conventions and undermined the rule of law, among other dubious activities. They seem far more deserving of their fate than Hoover.

Neither party has a viable strategy to address the coming crisis. Both are completely out of touch with reality in my opinion. Both are likely to try and fail in turn, and both will probably disintegrate. My fear is that a vengeful electorate determined to blame the rest of the world for their continuing misfortunes (probably not realizing that others are sharing in those misfortunes) may eventually chose a complete maniac - some sort of populist strongman bent on maintaining American hegemony at any cost. It's hard to imagine a rational Powerdown scenario under those circumstances.

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westexas on January 2, 2006 - 9:57pm Permalink | Subthread | Parent | Comments top
Re:  Kunstler & his Dow 4000 Prediction

The Dow Jones index was at 4,000 only 10 years ago, in 1995.   Assuming that the stock market reflects the estimated discounted present value of profits, what happens to those profit estimates as energy costs continue to increase?  

Also, consider the fact that we have a net negative national savings rate.   The American consumer is facing higher energy costs, higher health care costs, greater competition for jobs and higher interest rates.  What effect will forced reductions in consumer spending have on corporate profits?

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steverino on January 3, 2006 - 2:34am Permalink | Subthread | Parent | Comments top

GM is estimating an improvement in fuel economy of 25%, thereby taking the Tahoe into the low- to mid-20s mpg US range.

...Wow, dad....a tahoe!.. can we get one?

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odograph on January 2, 2006 - 10:36pm Permalink | Subthread | Parent | Comments top
Kunstler knows how to write some fun destruction.  His columns are a roller-coaster ride.

Statistically, the safest bet would be to say that next year will be a replay of the last, with minor changes.  That's the case most of the time.

The trick is predicting the game-changer, the 1929, or as a closer parallel to oil, the 1973 or 1979.

I think such things are unpredictable, but that you can make a perfectly good living by predicting them ;-)

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